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      Blog :: 06-2013

      Investment Advantages of Home Ownership

      Housing, as we all know, is a combination of necessity, consumption, and investment.  Though a house is indeed an investment, you should be clear-eyed about the risks and rewards of owning one.

      Despite the numerous risks of investing through home ownership - and acknowledging that it's neither always a slam dunk nor an appropriate step for everyone - long-term home ownership as an investment is always a good idea for a host of important reasons.  No other investment offers such a variety of positive factors stacked in its owner's favor.  Forced savings, tax-advantages, and potential for improvement all make home ownership the most important wealth creating vehicle widely available to almost anyone who is willing to invest.

      Though a little bit heavy on the math that we'd like, drilling down the numbers and crunching all the possible potential outcomes of where your money would go is the best way to evaluate whether you're more inclined to just keep hoarding your cash and risk using it for random purchases, or conveniently tuck it away and invest in your own home. It's exactly because of that that we've rounded up the most important advantages of home ownership from an investment perspective, both for personal wealth enrichment as well as financial freedom in the long-run:

      Opportunities

      Forced savings - It turns out that for most people, voluntary savings is tough-to-impossible on a monthly basis. This is especially true for the younger generation who are on the cusp of asking themselves whether it's a risk worth taking. What seems to effectively generate a personal financial savings surplus each year are personal as well as bank programs that 'force' people into saving, such as excessive income-tax withholding or automatic paycheck deductions for a retirement / 401K plan, or a financial institution savings program.

      Contrary to the belief that this is a burden similar to those mentioned above, monthly mortgage payments - which include a portion for paying down principal and purchase small increments of home equity on a monthly basis - work in a similar fashion.  Most of us have a hard time accumulating a few hundred thousand dollars in investment.  But through the forced-savings method of paying down a mortgage every month for a period of 15 or 30 years, and believe it or not, millions of people do manage it since they actually get to use and enjoy what they're paying and saving up for. Not a whole lot of people know this, but the 'magic' of wealth accumulation through home ownership can be attributed to this fact precisely because if you think and analyze it really hard, the psychology of forced savings matters tremendously, and would figure into your plans more than any other factor that you would consider.

      Capital gains tax exemption

      The mortgage interest tax deduction is what we think of when we think of tax-advantaged investing in our home, but  the capital gains tax exemption for home owners overwhelms the mortgage interest tax deduction - when it comes to wealth generation.

      A simple mathematical example illustrates this point.

      Let's say you bought your house for $200,000 15 years ago and just sold it for a gain.

      Factoring in various elements such as current inflation and the compound interest rate of your mortgage, and the fact your property only tend to increase over the years and it being sold within the next five years, you could end up already adding as much as $115,000 to your equity in a matter of a few short years - that's with or without improving and upgrading the site. Imagine almost doubling your initial investment in such a short period of time.

      In comparison, your money - assuming that you currently have the cold hard cash that is equivalent to your purchase price -  is put on a money placement savings account. The taxes alone that will be tied in on the "capital gains" you'd be making form that investment placement would already equal almost half of the amount that you could've made by just increasing your equity through homeownership. That's already eaten up a quarter of your potential earnings.

      Why? Well, money put into investments and savings and the like will be tied in to your income, and would eventually increase your income tax bracket, and get bundled up with all of the compensation you've made through labor and employment. In contrast, your home equity is taxed separately, and is completely exempt when the IRS calculates and factors it in to adjust your income tax rate. Viola! Instant money savings right there.

      Not only that, but as you roll your gains into let's say another property, the gains on your next house also remain completely exempt from taxation.  Most homeowners can continue to build home equity over a lifetime and a series of houses and never pay taxes on their capital gains, making it a viable option to earn more without actually paying more tax. This is a legal and legitimate way to increase your wealth. Think Donald Trump and Warren Buffet.

      In fact, this "trick" is so amazing and so awesome that a smart number of middle class households turn to this tactic to accumulate tax-free wealth. The capital gains tax exemption gains on your house as an investment is a really cool money saver! But wait, there's even more:

      Mortgage interest deductibility

      The tax deductibility of mortgage interest gets a lot of attention, and it's worth acknowledging this important advantage of home ownership as an investment. In fact, certain finance geeks view have this opinion that home ownership's an unfair tax break, and that it's also overvalued in the popular sense.

      But using the example given above, the interest rates you pay on your property are a deductible expense to the check you'll cut to Uncle Sam come April. Truthfully, the higher the mortgage amount, the bigger you're actually deducting from your income tax and conversely, the more money that you keep to yourself.

      Nominal increase in home equity

      The value of your home - $200,000 in our example - should at least keep pace with inflation in the medium and long term.  If inflation ticks up from an ordinary 2% per year to a less comfortable 9% per year, you can reasonably expect your home, like other hard assets will increase in price at a comparable rate. The only thing you need to remember with this point is that even though prices climb up and get more expensive, your property also increases its price tags. Inflation is good in this case since this will all be tax-free capital gains on your end.

      Another great thing about home ownership with a mortgage coupled with inflation is that your mortgage has a fixed value.  Assuming you paid the mortgage on time, your mortgage balance at the end of 10 years would be almost half of what you completely own.

      Your nominal 'home equity', under the inflationary scenario, would increase your total debt but also likely double what you've already put into payment, and at the same time, you've already paid down a significant amount of your loan. This indicates that your net worth is rather beefed-up, and you have your home to take credit for that.

      4-to-1 Leverage 

      Purchasing your $200,000 home with let's say a $40,000 down payment and a $160,000 mortgage offers you, in financial terms, 4-to-1 'leverage,' also known as the ratio between equity and debt.  For the average middle class person engaged in investing, banks and brokerage companies provide very little leverage.

      In many ways zero leverage is appropriate for the average investor, as leverage exaggerates investment returns, both up and down.  A review of financial history shows that leverage has a way of periodically punishing investors, and small-time investors are the least prepared for the catastrophic consequences of a systemic credit crunch.

      For middle class folks fortunate enough to weather a few decades of home equity gains amplified by leverage, however, small nest eggs become meaningful accumulations of wealth through the magic of 4-to-1 leverage.

      Yes, it increases your risk and the volatility of outcomes, especially in the short run.  If you can sustain a longer holding period, however, the debt helps you accumulate wealth.  And if you can use the debt responsibly - an acknowledged big 'if' - you can continue to access this home-equity-based leverage for other investment purposes.

      Local knowledge is useful

      Few middle class people can effectively apply local or personal knowledge to investing in securities.  We are all at an extraordinary information disadvantage when purchasing stocks, and even bonds.  Hundreds to tens of thousands of the smartest people in the world are - right now - following the same stocks we might buy as individuals, making moot most individual stock-picking efforts to find unrecognized value.

      When buying a house as an investment, however, specific local information can make us 'experts,' to some degree, in what we buy.  This local, personal knowledge helps even the playing field in a way not generally available in other investment areas.

      Any home buyer can investigate or intuit neighborhood trends, school quality, demographic shifts and hidden aesthetic potential in homes.  As home buyers we become long-term value-investors in a way totally unavailable to most people in other investment spheres.

      Home Improvement & 'Activist Investing'

      Home improvement, although not for everyone's enjoyment or range of specialties, can lead to fruitful outcomes. There are those though who would rather hire than do the work themselves, negating what savings they could have had in the "hard labor" and monetary investment they put in

      But for many, home maintenance and improvement allow us to physically enhance our investments.  We can personally work on a low-value or under-valued asset and make it more valuable.

      Think of it this way: when hedge fund investors purchase shares in a target company and then agitate to make that company more valuable for shareholders, they're acting like home improvement guys with a different set of tools.  Most of us can't bring our toolbox to a company board meeting.  Owning your own place makes you an 'activist investor', with the ability to improve and add equity to your existing investment.

      Taken in combination, these seven factors greatly stack the investment aspect of home ownership in your favor.  Of course anyone can lose money owning a home - like any true investment, it's risky - but most of us can accumulate long-term, real wealth through long-term home ownership.

      Other resources

      There are also interactive calculators and graphs out there that can show you how much more you're getting out of your property purchase compared to just renting. Check out CNN's calculator and see whether your home was a good investment; Trulia's estimator allows you to see whether it was better to have rented in your current residence than it was to buy; and finally the New York Times also does the same.

      For more tips and tricks into how you can make your investment grow, call us! (617) 505-1781

       

      This Week's Real Estate Roundup

       

      As the country marks the first day of summer, the real estate market seems to be really coming out of its gloomy days, both in Massachusetts and the nation - foreclosures are down, sales of existing homes are up, and development projects abound. Here's a roundup of this week's real estate trends:

      Condominium Market Movements This Month

      The condominium market is holding up the sales fort, with South Boston leading the pack with 78 units sold from the period covering June 1 to June 20. Attributed to the fast-rising number of developments being turned over in this by the shore neighborhood, the Innovation District as well as Fort Point are the districts that mainly contribute to the sales figure. Not surprisingly, the South End and Back Bay place 2nd and 3rd, with 54 and 51 sales, respectively. Jamaica Plan and Fenway round up the Top 5, with only a sale difference between the two, clocking in at 45 and 44 units sold. Note: This is a mix of newly-turned over and existing condominiums in all areas.

      In terms of average sale price, condominium properties in the Midtown lead the list, with an average price tag of $1,368,708. Beacon Hill and Back Bay, as always, follows suit with an average sale price of $1,175,199 and $1,158,508 respectively.Though most properties are dated with a range of 50 to 3 years old, these areas' prime location makes good for investment as well as residential buyouts. Closing the Top 5 for the highest average sale price are condominiums in the Financial District and the South End, with both having been sold below the million dollar mark, specifically $996,700 and $860,657. The units that were considered were a mix of one to three bedroom cuts, aggregated.

      Now to the more important figure: the list and sale price ratio. These figures indicate where properties sell above asking price and how much over or under they are from the seller's initial asking price tag. Jamaica Plain delivers the most above asking sales with more than 103% of listings being bought past the properties' asking. Surprising at second, Charlestown has also sold majority of its listings slightly over the asking price. Rounding up the top five whose listings went above asking are condominiums in the South End, South Boston, and Allston comes in tied at fifth place with Brighton. Losing out on a premium price tag is the Financial District, with condominiums having a lower leverage in terms of fetching above asking price but still well within market range.

      Sales of Existing Homes Up

      Sales of previously owned homes in the U.S. climbed in May to the highest level in more than three years and manufacturing improved in June, confirming out the Fed's view that risks to the expansion are abating. Nationally, purchases of existing homes rose over 4 percent, the most since November 2009. Attributed to the growing demand and lack of supply propelled the median home prices across the country, leading the real estate industry to forecast heftier gains throughout the summer selling season.

      Locally, the Northeast was second to contribute to the rise in the number of existing home sales, following only the Midwest. Regionally, Massachusetts saw a tremendous turnover of existing homes, selling more than 68% of its current inventory in just a span of one month. These properties were mostly located outside of the city, but still belonging to the Greater Boston area. Another significant area the contributed was the North Shore, whose existing home sales went through the roof in May, disposing of 87% of its inventory.

      Foreclosure Falling Fast

      The Bay State also posted record highs in terms of foreclosure transactions. More specifically, the number of Bay State homeowners facing foreclosure fell dramatically in May to their lowest level since the collapse of the real estate market in 2005. Only a total of 248 foreclosure petitions, were filed last month compared to 1,779 filed last May, an 86 percent decrease. Through May of this year, 2,698 petitions to foreclose have been filed statewide, down 66 percent from 7,877 during the same period in 2012. These numbers strongly indicate that the foreclosure crisis is finally coming to a close, and is surely becoming a non-determinant factor in the real estate market.

      Copley Place Development Comes Creeping Back In

      Stalled for nearly six years, the plan to redevelop the Copley Place is back on the drawing board. The 569-foot residential and retail tower is back in play, with the goal to complete the construction of the stalled structure in the next four years. Once completed, the 52-story tower will have 109 condominium units and 433 apartments. The plan also includes an additional 60,000 square feet of retail and restaurant space. The yet-to-be-named project (assuming it won't take on the Copley Place name), will be one of the tallest towers in the city, having spectacular views of the Boston and Cambridge skyline. Simon Properties will be on the forefront of updating anxious and perspective clients of when construction will begin, and once the BCDA finally approves its proposed schematics.

      Winning A Bidding War

      Here's the scenario: You've looked at dozens of apartments all around the city, when, finally, you come across the perfect one, the one you MUST have for its excellent location, satisfying square footage, accessibility and convenience, low maintenance fees, and great price - in other words, the works.

      When you put in an offer, the listing broker informs you there is another buyer...which means you've officially entered a bidding war. Now what?

      Well, that is not uncommon nowadays because as you've no doubt heard, seen, and possibly experienced, Boston's real estate market is sizzling, with buyers feeling the heat as low inventory constrains options and bidding wars emerge even from the simplest of properties. In fact, bidding wars are now more than just a common practice; it's a staple.

      So we've lined up the best tricks and tips for you bidders out there who are just lazily waiting to hear back from your offer; and if you're not yet in the process of warring against the world of property hunters, then keep these in mind so you can soldier on with guns a blazing:

      STACK THE ODDS IN YOUR FAVOR, FINANCIALLY 

      Offer all cash if you can. If you can't, then try to provide a non-contingent offer. Usually when sellers see this, they'll be dumbstrucked with the idea that they could walk away the next day with a pile of cash on their bags, and easily sign over the property's deed to you.

      Though cash is - and will always be king, non-contigent financial offers enable you to say to the seller that you won't be getting out of the contract; it's ensures them that you're willing to do everything and anything necessary to produce the amount needed to satisfy their asking price. These kinds of deals are somewhat common these days and won't necessarily ruin your chances of closing in on a property, and on the contrary enhances the likelihood of acceptance.

      A contingent offer on the other hand (i.e. that you will be able to settle payment and or mortgage upon the sale of your previous home), will definitely move you to the bottom of the list. Remember that contingencies are a tool that exposes your risky disposition, not the other way around.

      ACT INTERESTED

      People tend to point out flaws or act less-than-thrilled with an apartment because they think showing enthusiasm will compromise their negotiating ability. This is not true. Showing interest isn't a bad thing, on the contrary, it gives the listing agent a sense of how serious you are. Remember that in a seller's market, each individual that walks in to an open house is serious - and you need to stand out. When sellers have to decide between people, those first impressions make a difference. Would you be thrilled to sell your beloved home to a Negative Nelly? Most likely not.

      STAY IN TOUCH WITH YOUR BROKERS

      Bidding wars can be pretty fluid situations. If the bidding lasts a week, for example, the prices offered from Monday to "best-and-final" will obviously change, but someone could also offer all cash in the middle of the week or financial contingencies could be lifted. Your broker, coordinating with the listing broker, will know when things change, so your offer will remain competitive.

      As an added insight, we often asking listing brokers the following questions when we have clients to have put in bids:

      • What's the seller's time frame? Depending on how fast/slow the seller wants to move, they may look at offers differently.
      • How many rounds of bidding will there be? If a seller is going to have three rounds of bidding, you don't want to bid your "best and final" offer immediately. But, if a seller is only taking "best and final," then this should change how you bid.
      • How long will it take for the seller to accept an offer? If it takes a while, bid lower than your "best and final" so if other offers come in and trump yours you won't be out of luck.
      • Have any of the other bidders offered all cash? This can change throughout the bidding process, but it helps to get a sense of where your offer would stand.
      • Are any of the other bidders' offers contingent upon financing? If yours isn't, you can play that up. But keep in mind that contingencies can be lifted throughout the process.

      MAKE AN OFFER IN AN ODD NUMBER

      We suggest you channel your inner "Price is Right" contestant. Most people bid in round increments, such as $550,000 or $900,000. If you bid $553,000 or $907,000, you'll be above the last person - it's as simple as that. Bidding in odd increments also gives you an advantage of calling the next round of bids lower rather than jumping in the thousands. Though some brokers might look at this as "low balling", it really is not since it's just considered wiggle room for when "best and final" offers come through.

      PUT A DEADLINE ON YOUR OFFER

      Make it clear that your offer has an expiration date. More importantly, say the words out loud. Saying the duration out loud makes it more realistic and reminds the sellers and their broker of the possibility of the bid going stale. It also gives you a clear idea of when to expect a response. This will lead to the seller feeling more compelled to take your offer, and you minimize your competition.

      GIVE IT A PERSONAL TOUCH

      Writing a letter explaining who you are, your intentions, and why you love the apartment can go a long way. Someone who lived in a place for 15 years will have a lot of emotional ties to it, and a personal letter can help you stand out. Recently, this has been the trend in ultra-hot markets such as DC and Phoenix, where people are having difficulty letting go of prime properties because of the sheer connection they have with them. Giving the seller an insight into your character helps them get a clear sense of who you are, and who will eventually take over their humble abode.

      IMPORTANT NOTE: Keep in mind that every situation is different. If you're buying a condo from a developer with multiple offers, then a personal letter won't make sense. In this case, bidding wars don't even happen. Walk-in, sign the offer, and walk out with a defined delivery date.

      BE ACCOMMODATING

      Selling an apartment comes with all kinds of to-do's, so help the seller check some of them off. Does the seller want to close early? Let them. Or do they want to stay in the apartment longer? Sure. Are they selling any furniture? Buy it (even if you don't want it, it could be worth it to close the deal). Just remember that their happiness equals yours, so finding the right balance (as well as the right agent who can mediate for you!) will go a long way in your battle for that perfect piece of property.

      Before You Lease A Luxury Rental

      Boston is such a big city - in apartment terms, that is. There are all these neighborhoods to choose from ranging from the collegiate undergrad pad to the preppy yuppie with a yard, to the four bedroom family, and finally the lofty luxurious dwellings. And with the apartment and condo marketing slowly tightening over spring and summer, there's sure to be less and less available listings out there as fall (and students) flocks back in.

      So what choices does one really have in such a congested market? Well, a lot if you know where to look. But for those who have an acquired taste for the opulent (and it seems in Boston there are a lot of them!), luxury listings abound. Used loosely, luxury doesn't necessarily translate to unaffordable rates, but are priced according to the cut and size of the place and the amenities and services within the building. This might include a heated indoor lap pool, a state-of-the-art fitness center, a private theater screening room, entertainment lounge, a game room, catering kitchen and in some cases, a pet spa. Sounds nice, doesn't it? Well you would be surprised to know that all these amenities are available within the city! More surprisingly, they're quite affordable too! But before you rush over to our office to schedule a showing of these studio and one bedroom units, take a moment to think of what questions you'd want answers to signing on the dotted line.

      Particularly, here are ten questions to ask before renting in a luxury building:

      Do you have to pay extra for the gym?

      Sure, the building's fitness center rivals your local Equinox--with a lap pool, elliptical machines a-plenty and round-the-clock spin classes--but if it isn't included in the rent, you might end up paying more than you would otherwise for a gym just because it's on premises.

      If you already use the gym at work for a nominal fee, or if you'll have to pay a hefty penalty to quit your current gym--or if you've never ever worked out in the past--don't allow yourself to be won over by the impressive exercise facility.

      If, on the other hand, having a gym just an elevator ride away from home sounds perfect to you, check it out at the time of day you would normally want to use it to see if there's a wait for your favorite excercise equipment.

      How's the cell-service in those sky-high apartments?

      Spotty cell service can be a problem for those who dwell several dozen stories above the earth. Find out if the building offers a technological workaround, like a cellular base station that connects calls through a broadband network. Most likely than not, the buildings in downtown Boston area like 45 Province, The Ritz, Millennium Place, and others have in-unit antennae to prevent this, but there's really no harm in asking.

      45 Province Financial District Downtown Boston International real estate condominiums back bay apartments condoIs the location convenient enough?

      In the classic craziness and razzle-dazzle of Boston real-estate, landlords and management companies often compensate for an awkward location -- say, three streets away from the nearest T stop -- by piling on amenities and charging luxury rents.

      Our recommendation, once you're almost set to sign a luxury lease, is to practice your commute -- and remain focused on what you are looking for. Often, people get excited about amenities that they rarely end up using. These times, it's extremely important to stay practical. Don't allow yourself to be swayed by amenities you won't use anyway. If you've never stepped foot in a gym before, you probably won't start now. And if you don't have a pooch to pamper, the pet spa is useless.

      Keep in mind that you have to have location as your top priority. You'll use the screening room and roofdeck a fraction of times you'll commute...twice a day, five days a week, all year round. If you decide a long commute is worth it, and the building runs a shuttle bus to the nearest T station, find out how frequently it runs -- and whether it will be convenient to take even on weekends.

      Are guarantors accepted?

      Luxury buildings don't come cheap. If your annual income (or your and your roommates' income combined) doesn't add up to 20-25 times the monthly rent--and if putting down a larger security deposit (say, 2 to 4 months rent) isn't possible -- will you be allowed to call in some reinforcements? Many landlords will accept a guarantor who makes at least 20 times the monthly rent and lives in the Northeast region.

      If you're short on wealthy nearby relatives, see if the building is one of the hundreds in Boston and other major cities that accepts some form of renter's lease and security insurance. Chances are, they'd be willing to rent it out to someone rather than wait perennially to find a "proper" person to fill the property.

      What's the story with storage space?

      Your luxury building is more likely than other types of rentals to offer storage space, bike spaces, stroller storage and even wine storage, but is there a wait list? Is the price included in the rent? Space is a commodity you do not want to run short of, especially in luxury units since you're most likely to have socials and events that would require constant storage of party or guest needs.

      Are you guaranteed a spot in the garage?

      If you're one of the lucky/unlucky Bostonians who owns a car, you may be sick of playing the alternate side parking game every morning. But even if your new building has a garage, don't just assume that you're guaranteed a spot. Many places offer guaranteed parking spots for residents. Parking space is most abundant in the Cambridge condo market, but Boston also has its fair share of basement parking spaces. Some even have free valet service for those who are always in a rush to home, though of course tipping will be a must so better count that in to your budget.

      Are dogs allowed?

      Luxury rentals tend to be more dog-friendly than many rental buildings (at least if your dog is under 50 pounds). You will probably need to sign a pet rider--an addendum to your lease that lists the number and type of pets you own--and pay a pet deposit. You may also have to ride the service elevator when you're walking your dog, so ask about any special rules that apply. Many luxury buildings permit smaller pets (under 50 pounds), but prohibit larger animals or exotic pets that might frighten other residents.

      Do they take credit cards?

      Many large buildings owned and professionally managed by . Before you hand yours over, ask whether you will be charged a "convenience fee" for the pleasure and points of putting your rent on plastic. There's also the big chance that if you're renting a luxury unit, the property managers are in-house and would have a website payment portal that would allow you to use your credit card and debit card for rent transactions.

      Call us now to find out what luxury apartments are available to you! We'll find you the best suitable place that matches your preferences! Call us at (617) 505-1781 now!

      May Real Estate Market Breaks Record

      Saying that Boston is back in the real estate game is such an understatement these days. This is especially true, as the Bay state real estate market saw record home sales again in May, nearly hitting a ninety percent increase compared to the same period last year. Sales of properties almost doubled as the number of pending homes under agreement climb to 9,075 from previous year's 4,944. This is the first time since 2004 that the Bay state breached the 9,000 mark, with all transactions having submitted purchase and sales agreements.

      As with real estate market trends, pending sales have historically been used to predict actual home sales in the summer months, when the real estate market - both in Boston and in other key cities, has traditionally been the peak of sales and turnovers. Aside from the record sale of single-family homes, the condominium sector also hit an all-time high, increasing 63 percent compared to last year - a feat that the city hasn't been seen ever before.

      One reason for the record-breaking sales is that people are afraid of the onslaught of the summer selling season, with property prices continually increasing. Investors are looking to buy-in before they're completely out of their price range, as well as the selection and inventory continue to drop. Mortgages rates are also climbing, so investors are seeing the likelihood of acquisition in the near future dimming. Median prices for homes in Massachusetts rose nearly 14 percent in April to $313,000, up from the $275,000 only a year ago.

      Though these figures represent "pending sales", these transactions provide information about where the real estate market is heading in next 90 days. A pending sale or a sale "under agreement" is when the buyer and seller agree on the terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close at the Registry of Deeds.

      Alongside this positive property news, another surprising transaction came to light earlier this week, as two tandem parking spots in the Back Bay area sold for $560,000. Originally listed and acquired for $42,000, the two parking slots are in the heart of the city, by Newbury Street and Commonwealth Avenue. This transaction breaks the current record for parking spot sale, which was previously pegged at $250,000. parking spot was located in .

      Homeownership Compact Makes Its Mark

      Are you looking to buy your first home in the Bay State? Maybe you've heard of all the great things going on in the real estate market right now, and can't help but dream of bidding and buying your own piece of property. But of course, like anything else, your finances are probably the biggest consideration you have in taking that next step into homeownership - probably you're credit score is below ideal, or you just don't have enough funds for that required downpayment. Well, all of that is about to has changed.

      Today, Gov. Deval Patrick signed the so-called "Home Ownership Compact" that releases more than 10,000 mortgages to first-time homebuyers in the Bay State. Regardless of your income bracket and purchase capability, the compact's aim is to provide mortgages from partner financial institutions, facilitated by MassHousing and the Massachusetts Housing Partnership Program. This comes as the state celebrates "Housing Week", and is aligned with city official's goal of creating 20,000 housing units in the next five years. Financial lending partners of the program include both locally-based and global banks such as Sovereign Bank, Citizens' Bank, Eastern Bank, Rockland Bank and Trust, Enterprise Bank, and Blue Hills Bank - with the latter three being Boston-based.

      The compact is specially designed for young individuals and start-up families who are in the market for properties, but are limited by their financial capabilities and high mortgage interest rates that prohibit them from purchasing their ideal home. The newly signed deal also aims to further bolster the state's real estate industry, which is now in seller's side, and is in full-swing for the summer buying season.

      The program comes as more and more developments are being inked throughout the state. To date, there 53 pending apartment projects in Boston alone with delivery expected within the next two to three years. In particular, these developments are located east, west and south of the city, with the innovation district leading the pack. Together with the  Homeownership Compact, these soon-to-be-built dwellings are also required by the state of allot at least 15% of its inventory to individuals who are obtaining property via the MassHousing facility.

      Interested to purchase property? Contact us now and find out for free what you can afford and how you can best acquire it. Call (617) 505-1781 now!

      Opportunities at Open Houses

      The "open house" has long been a tradition in real estate. Each weekend across the country, hordes of agents put up their A-frame signs and point buyers in the direction of open houses. Meanwhile, buyers with all kinds of motivations stream in and out of these homes -- from those just tipping their toes into the water to those who are on the hunt, making offers and ready to buy.

      Buyers just getting started on the circuit may be confused about how to approach an open house. What do you need to know in advance? How should you prepare? What should you say -- and not say? Here are truly valuable tips for the best ways to approach an open house.

      Focus on what you know

      Whether you're scouring listings onlineor in person, the sheer volume of open houses out there will probably overwhelm you. Don't let it. For now, focus on the area where you think you want to buy. If you like a certain part of town, the open house will give you an opportunity to know the community and neighborhood better. See what you can get for the money there. Don't get distracted or pulled in all kinds of directions. Start with what you know. It will help you lay the groundwork for a successful house hunt.

      Be open to higher and lower price ranges

      If you're pre-approved to buy a home in the $350,000 range, you're wasting your time looking at $750,000 properties. However, it does makes sense to look upward to the $400,000 range as well as down at $275,000. Knowing what you can get above and below your target range will be informative. If you know that for $50,000 less you would be on a busier street, then you'll appreciate it much better than the single-family detach in an unknown neighborhood (especially in Boston where busier streets equals student tenants for investors). The same could be said for a property that costs $50,000 more than your $350,000 target, but has a newly renovated kitchen or bath. You still can't afford it, but if you want to live in that same neighborhood, you might realize you'll have to settle for a home that needs some renovation. Finally, homes priced higher than your budget can easily get reduced down to your range. And, especially in tight markets like ours, those priced lower could get bid up right into your range. Remember, it's a seller's market out there and final sale price tend to be 10-12% higher than the listed price.

      Watch the people at an open house

      You may be a serious buyer, but you're new to the market and haven't seen enough to know how to react to a particular home, its price or how it shows. Chances are, there are more experienced buyers at the open house who do know. They can tell right off the bat if the home is overpriced, underpriced or something else. Are people walking in and walking out without much consideration? Not a good sign. Are buyers hovering around the agent asking all kinds of questions about the home? Chances are, it's a new listing and priced well. Prospective buyers aren't going to waste their time hanging around a listing, checking out the closet space, garage and the backyard, if they feel the price isn't realistic. By the way: While you're checking out who's at the open house, a good agent is doing the same thing. What's more, the agent should watch people coming through the door to help gauge the market's response to the home and get a better sense of how urgent you'll need to put in an offer to be considered as a serious buyer.

      Pick the showing agent's brain

      The agent at an open house may be the agent who represents the seller  or another agent standing in for the listing agent. They may be trying to meet new buyers. Either way, this person is in the market and likely knows a lot about the house or the neighborhood. Many buyers have met their agents at an open house early in the sales process. This is a breeding ground for long-term buyer and agent relationships. If the agent seems knowledgeable or you connect with him or her, go with it. You'll want someone on your side, an advocate for you once you get serious in the market. Use the open house as a way to interview agents who might represent you as a buyer in near the future.

      On the other hand, while it may be polite, you don't have to introduce yourself to the agent or even mention that you're just getting started in the market. You also shouldn't be forced to provide contact information. If you don't wish to give it out, just provide your name and politely decline to offer further details. A good agent understands and respects their client's right to privacy, whatever the case.

      Know the days on market before going to an open house

      Days on market, or DOM, is the telltale sign of how a particular listing is faring in the marketplace. If you see a home priced a little higher than what you can afford but its DOM is at 100, chances are that home won't be selling at its list price. Nowadays however, this is hardly the case as it's slim pickings inventory-wise.

      While everyone else is getting caught up in the excitement of an underpriced property nearby, the home with a significant DOM may be an even better opportunity. Go to this open house and check out the activity. If the place is empty, engage the agent and see how they respond. If it's been on the market for a while, they would be open to convincing a buyer to negotiate. There also may be a history to the listing that you wouldn't get from looking online. Maybe it had a contract early on and fell apart? Maybe the seller has already relocated and is open to a lower offer, but just won't reduce the price? You won't know until you engage.

      Going to open houses will take a lot of time and energy. You might visit dozens of homes you don't like before you realize what you do like. That's the way it works. So take your time. Use the open houses as opportunities to learn the market, gather data, find a good agent and build up a knowledge base for your future home purchase.

      Things You Learn From Selling Your Home

      If you've been keeping up with the recent goings on with the Boston real estate market, you probably know that we've officially transitioned into a seller's market. Gone are the days when buyers beat out seller's asking prices, and delicately dictate their own price tag. Nowadays, properties fly off the shelf at an average of 10-12% higher than the asking price, making sellers the ultimate winners.

      And if you're lucky to be one of them, you know that your property is about to fetch you a hefty payday. But aside from the obvious monetary gains, have you ever wondered what else is in it for you? Selling your property might be a quick escape route to financial freedom, but there are definitely some lessons to learn from it - ones that can help you in the future when you're on your path to becoming a real estate mogul. Keeping these in mind will surely prepare you for your next property purchase and sale, and should further enrich your real estate knowledge bank for that future flip.

      It's not your home anymore

      Regardless of how long you've lived in your current home, the moment you decided to put it on the market, it is no longer yours. Take out the family pictures mounted on the walls. Your stager should inform you of the no no's of selling, but just in case you don't have one - this tip is definitely an important one. Professional stagers would advice you to strip the walls to be almost bare, with the exception of a strategically placed mirror or two and a couple of small scenic pictures in nice frames. This removes personality, allowing potential buyers to see the house as theirs, not yours. Making it easier for them to put in an offer.

      What 'cut the clutter' really means

      It's almost common sense that you take out clutter and organize your place before entertaining guests. This applies even more if you're showing it to potential buyers. Putting only the essential amount of furniture in each room makes the space appear larger and more enticing;  it also clears out plenty of clutter and leaves room for imagination. Keep in mind that as the owner, expect to have to take out almost everything.

      Also, getting a storage rental might not be the worst idea, since you'll probably need to remove sofas, chairs, dressers, cabinets, lamps, televisions, a desk, kitchenware and one-third of the clothes in our closets. Our garage is now filled to the limit with furniture and full boxes. Be prepared to park your car outside.

      Those large items might not come back out so easily

      You may tell yourself that anything you got in a room in one piece will come back out in one piece. But as anyone who has ever moved can attest, getting a large item, mainly a sofa, through tight doorways can be like trying to solve a puzzle that weighs several hundred pounds. Try to recall which of your furnitures you had to assemble and which ones came as is, so you have a better grasp of how much time it'll take to move and store everything.

      Some cleaning projects will be frustratingly stubborn

      A decade's worth of hands running up and down handrails and walls have probably caused some sort of staining in your furniture and fixtures. Try to find ways to clean them and as much as possible, be prepared to really rough it out, as they won't be easy to clean. Remember, there are going to be projects that need to be done that won't come easy, especially if you've lived in the property for many years.

      Fix those nagging problems

      If you've put off fixing an issue in your home, it's probably for a good reason. Hopefully it's not just that you're lazy, but because it's too demanding. Always keep in mind that even the smallest neglected problems could put off buyers. Allot some time to address these issues, to make your property gleam. Believe me, the tiniest problem that potential buyers see, they will ask for concessions so if you don't want to knock down your price, better fix what you need to before they come knocking.

      Everything will take longer than you think

      Be realistic in your expectations. Allotting time for fixing problems or attending to other moving-related concerns is a smart idea for the weekends. It's also a idea to involve everyone in your household, even your friends who don't live with you. Make it to an event so that the harsh reality of relocating won't be as sad. It's also a great way to cut down on costs and the time that it'll take to get everything done.

      Putting down your possessions in a sheet is probably the best way to approach which needs more time to attend to, and therefore could save you a bunch of time in the future. By rule of thumb, each task that's equivalent to three hours, usually ends up taking an hour more. So after you do your inventory, tabulate how many hours you need to fix up, dress up, and make your property shine then add the supplemental hours accordingly.

      The house won't stay clean

      With the house freshly cleaned, and thoroughly sponged and filled with just a minimal amount of furniture in the rooms, your mission of making the home look large and inviting should be accomplished. Next on your docket would be to maintain it that way, especially if you have constant showings. Banning shoes in doors and putting up socks-only spaces is a great idea to keep the area clean and neat. Don't be disheartened if you aren't able to fully make it gleam as you first did when you cleaned up your act. Remember, you can't live in a house without kicking up a little dirt. It's what you'll be dealing with until the house sells.

      The walls are in worse shape than you think

      Once you start removing the clutter, you'll find all kind of unpleasant surprises. Often, once you remove those dressers, you would find nail holes, gouges and cracks that are easily visible in the naked walls. These would require filling the holes and fixing the damaged spots, then sanding the walls smooth and then vacuuming up all the dust, and will proved to be a time-consuming project that needs careful planning. On the plus side however, the new homeowners are going to see perfectly plain walls, that scream: decorate me.

      The reward at the end

      Take these lessons to heart when you sell your place, regardless if it's already on the way or if you're planning on selling in the near future. Having a good grasp of what happens in a property turnover will make you efficient the next time you invest and sell. If you have multiple properties, then it's even better, since you can make templates of how to exit from your abode.

      Skyscraper City Finally To Happen

       

      You might think Boston is a conservative city - which it really is, but recent real estate happenings sure makes it look like Beantown is headed to modern times as the city is planning to erect a 600-foot tower at the Government Center Garage, along with six other hulking buildings that are set to transform the city's skyline and make it comparable to other metropolitan sceneries.

      The proposed project, headed by HYM Investment Group, would be demolishing much of the garage that currently sits adjacent to the Government Center plot, paving the way for six new buildings that is projected to host 771 residences, 1.3 million square feet of office space, 1,100 parking slots, and 82,500 square feet of retail space (food and shopping combined). The 600-foot tower is set to be the city's crown construction being its tallest building in sight. In addition to this, the plan also calls for a pair of large residential buildings - one standing 470 feet high, and another at 275 feet. Combined, the three towers will be located on the western side of Congress Street closest to Government Center. Not too far from this site, the developer is also proposing to build a 275-foot mixed use condominium hotel, that will also host additional offices and retail stores. Once completely laid out, the new buildings are set to form a new public square along the sprawling Rose Kennedy Greenway.

      Once approved by the Boston Redevelopment Authority, the said-to-be $2 billion project is slated to start at the end of this year, and will occupy 4.8 acres of government-owned and regulated land. The project will be welcome addition to the mostly-posh and heavily office-centric location that, up until this project, only has traditional mid-rise developments. Originally, the site was planned to be redeveloped back in 2007 via a joint venture between the National Electrical Benefit Fund and British-based Lewis Trust Group, however the real estate collapse that followed soon after indefinitely halted construction plans.

      With the project pushing through, experts are estimating the development would produce about $11 million in annual tax revenues, and would generate an estimated 2,600 construction jobs for the city. HYM is also responsible for the highly-acclaimed North Point development in East Cambridge, and is also a majority stakeholder in the 20-story luxury apartment complex in the Innovation District, dubbed as Waterside Place.

      Aside from this big BIG breaking news, Boston has also seen multiple plans to erect skyscraper buildings throughout the city since the beginning of the recession's end last year. In particular, projects such as the Christian Science Plaza's redevelopment and addition of a 700-foot condominium and hotel, as well as Copley Place's vertical expansion are currently on the pipeline and are slated to begin within the summer season. Fenway Center, although still under consideration, is also poised to give rise to a new skyline west of the city. In fact, development is already on the way for the parcel fronting The Landmark Center in Fenway-Brookline area.

      Indeed, Boston is headed towards realizing its real estate potential, which was once thought to be non-existent due to it's citizen's upheaval against skyscraper that in traditionalist's view, is detrimental to the overall historical feel of the city. However the city, together with developers and residents alike, have more recently seen eye-to-eye redeveloping areas that need modernization and a fresh look. More importantly, Bostonians are realizing that these developments greatly contribute to the city (and the state's) overall economic recovery, creating jobs and jump-starting as well as maintaining the recent real estate rebound.

      Checkout our blog for more recent development news!

      Green District To See More Growth This Year Fenway Center Finally On The Way and many more... 

      Avoiding Buyer's Remorse: Real Estate Edition

      Ever bought something special and later realized you didn't really need it or like it after all? It might be something as small as a new pair of shoes, or as big as an over-the-top flatscreen TV. Usually, returning it is as simple as boxing it back up, locating the receipt, and taking it back to the store for a full refund. But unlike store merchandise or a car, you can't 'try before you buy' a home, which makes your decision to buy or not buy even more stressful. Not only is a home the largest investment you'll probably ever make, it's also where you'll lay your head at night, spend years of your life, and make memories. And since Boston is about to hit the buyer's bidding wars this summer selling season, caused by limited inventory and a growing number of investors, it's important to keep in mind how you can avoid a flip flop situation.

      If you're caught in the hype of the hot new listing, and knowing there are other buyers zeroing in on the same property, you might feel compelled to go the extra mile to "win" the home. And then, it's quite possible that, within hours or days of getting into contract, you may start to feel buyer's remorse. Once you've had some time to cool off, you might realize the home may not be the best one for you or that there are issues you overlooked previously. You want to pull out of the contract.

      So the question then becomes: can you avoid buyer's remorse? How? Just stay grounded on these reflective real estate questions throughout the home buying process, and you should sail away through a sale without a hitch:

      Must 'own' this house or must 'win' this house?

      Often, in a competitive situation, a buyer just wants to "win." If you're competing and forced into a multiple counter-offer situation, step back and ask yourself: Is this the home I really want or do I just want to beat out the other buyers? This is especially important because lately, there's been a lot of properties that have sold (on average) 10-12% above the original asking price making the battle of the buyers more intense than ever before. It's important to factor this in, as bidding wars tend to create a completely different set of circumstances, and the home may no longer be right for you.

      Have I seen the home more than once? How much of it have I seen?

      There are hundreds of buyers who, through the years, saw a place only once. There are even savvy international buyers who buy places sight unseen. This is not uncommon nor is it the norm. No matter how much you think you love the home, if you've only seen it once, you could be heading for buyer's remorse. Going back in the evening or a different time of days provides another perspective. Also, you may see things differently the second time around. Often, you miss something in your first pass that stands out the second time around.

      For international buyers, consider as much photos of the property as you can, and if you have a local representative who can go in your stead, then don't hesitate to keep him or her coming back until you're fully satisfied with your "off site inspections".

      It's equally important to walk through every room, if at all possible. A quick yet complete tour of the home provides a basic understanding of the floor plan, condition and size. But to really know a home, dig deep. Walk to the end of the lot and look at the back of the home. Open every closet and go in the attic, basement, and garage. Look at the neighboring houses, too, and try your car in the garage.

      Have I seen a floor plan?

      Seeing an architectural floor plan provides an opportunity to see the home in a different context. It's possible you'll pick up on things you might have otherwise missed. This is also essential for investors, so that you can get a grasp of the improvements - either in the immediate future or in the long run, that you could make to increase the property's value. For fixer-uppers or properties that need a little bit of work, a floor plan is not only essential but also gravely important so you're aware of what you're actually acquiring.

      Seeing the schematics puts you in not only a better buying position, but also aligns your budget accordingly so you can determine what costs are entailed to improving the property. If a floor plan isn't available from the seller or agent, consult your broker so that he can look up public records that shows crucial information about the piece or real estate you're interested in.

      Have I reviewed the photos after seeing the home?

      Going back to the listing photos helps jog your memory. Seeing the photos, which are snapshots in time, will give you a different and hopefully positive perspective. Ask yourself questions like: was the shade closed in the photo and if so, why? Did you ever look out that window? Does the photo remind you that the bedrooms are small because there are only twin or queen-sized beds without any nightstands? These types of real estate reflections are a great way to evaluate if a home will work for you, or is worth your investment.

      Have I toured the home privately?

      Visiting a home with hordes of other buyers isn't the best way to see it. You may feel cramped or rushed. You might want to sit in one of the rooms in silence for a few minutes, but it's often not possible during an open house. There may be questions you or your agent would like to ask the listing agent, but don't want everyone to hear. Or you just would want the time and attention of the listing agent. If you're serious about a home, go back for a private showing. A lot more is revealed when you have time alone in the property.

      Honestly, brokers welcome private showings of the properties they have on hand since it makes them confident about your interests. Take the time to chat with agents too - you'll be surprised at how much additional information you'll learn just through casual conversation. Do not be afraid to inquire as much as you'd like since in this scenario, you have the advantage - no matter if it's a seller's market or not; remember you are the buyer who is eagerly interested.

      Have I read the seller's disclosures?

      If you haven't seen or heard about any disclosures before making an offer, it could be a red flag. In many markets, disclosure packages are available prior to making an offer. If not, a good listing agent will reveal the major disclosure items verbally. Ask if any disclosures are available and read them thoroughly before making an offer. If you're too busy to review the disclosures, you shouldn't make an offer. Also, find out if there are inspection, termite, or other reports you haven't seen yet.

      Is this home what I set out to look for in the first place?

      Many times your path changes once you're in the market. You may realize that another neighborhood will give you more for your money. Or the home that's in the school district you want needs a lot of renovation, which you hadn't counted on doing. You may discover that with lower rates and being open to a new or emerging neighborhood, you could afford a single-family home and not have to settle for a condo.

      When buyers are in the midst of a competitive home market, it's easy to settle on a home that "kind of" works, or to lapse into autopilot mode. You may just be ready to buy and be done with it. You don't think about things like the commute from the new neighborhood to your job, that you aren't the renovating type, or that you never signed up for lawn mowing and maintenance issues associated with a single-family home.

      A good agent will bring you back to your original plan before you sign a contract. You and your agent should review all the reasons why the home isn't the right option. It's better to flesh that out in advance than to ignore the warning signs and cancel.

      To help protect you from buyer's remorse, always have an inspection contingency in your purchase agreement. An inspection contingency should be reserved for something serious about the property you didn't know before making your offer. However, some agents call it the "cold feet" or "buyer's remorse" contingency. It allows you to exit the agreement should something come up.

      If you think you've found the home of your dreams but have the littlest doubt, or you can't answer all of the above questions, think twice about accepting that final counter or even writing the offer to begin with. Ultimately, never sign an agreement if you aren't completely convinced this is the home for you.

      Getting ready to invest? Schedule a FREE consultation with us now and get more tips and tricks on how you can find and acquire that perfect piece of property! Call (617) 505-1781 now!